ID :
25387
Sun, 10/19/2008 - 13:00
Auther :
Shortlink :
https://www.oananews.org//node/25387
The shortlink copeid
S. Korea announces US$100 bln in guarantees on banks' foreign debt
SEOUL, Oct. 19 (Yonhap) -- South Korea's government on Sunday officially announced that it will provide US$100 billion worth of state guarantees on foreign debts to be raised by local banks as part of efforts to ease the dollar shortage in the local financial sector and shore up market confidence.
Separately, it will supply $30 billion worth of dollars "as soon as possible" to
local banks and exporters by using its foreign reserve holdings, in addition to
its recent $15 billion injection into the financial system.
The moves are part of sweeping measures jointly announced by the Finance
Ministry, the Bank of Korea and the Financial Services Commission earlier on
Sunday in an emergency conference briefing held in central Seoul.
"As other major economies start providing guarantees to inter-bank loans, the
Korean government will take similar measures to avoid placing domestic banks at a
relative disadvantage in terms of overseas funding and to allay fears in the
financial markets," said a government statement jointly issued by chiefs of the
three government bodies.
"The government will pursue market stabilization policies in a preemptive,
decisive and sufficient manner to minimize the total cost of implementing the
proposed measures," the statement noted.
The state guarantees will be applied immediately from Monday for three years on
foreign debts to be raised until June 30, 2009, the government said. Until it
obtains parliamentary approval, the guarantees will be provided by the state-run
Korea Development Bank and the Export-Import Bank of Korea.
In a related move, the government said that it will offer tax incentives for
long-term holdings of funds, a move that it expects will help strengthen
stability of the stock markets, which are undergoing a roller-coaster session,
sparking fears over capital outflow.
The government plans to inject 1 trillion won into the Industrial Bank of Korea,
a capital injection that is expected to increase its lending capacity by 12
trillion won for cash-strapped small- and medium-sized enterprises.
However, it excluded the much-sought demand to extend deposit insurance benefits,
as current market conditions are not serious enough to require such an action.
"We will take sufficient action at the right time if need arises." the statement
said.
Those measures are the latest government-led drive to stabilize the financial
markets as things are going from bad to worse after the collapse of global
investment banks last month. It is also in line with joint efforts taken by
advanced nations including capital injection, rate cuts and inter-bank loan
guarantees.
On the global front, the government said that it will step up international
cooperation, including with neighboring Asian countries, to tackle the evolving
U.S.-originated financial turmoil.
"The government will not only promote multinational collaboration among group of
20 industrialized countries, but also reinforce the regional ties centered on
Korea, China and Japan," said the government statement.
kokobj@yna.co.kr
(END)
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Separately, it will supply $30 billion worth of dollars "as soon as possible" to
local banks and exporters by using its foreign reserve holdings, in addition to
its recent $15 billion injection into the financial system.
The moves are part of sweeping measures jointly announced by the Finance
Ministry, the Bank of Korea and the Financial Services Commission earlier on
Sunday in an emergency conference briefing held in central Seoul.
"As other major economies start providing guarantees to inter-bank loans, the
Korean government will take similar measures to avoid placing domestic banks at a
relative disadvantage in terms of overseas funding and to allay fears in the
financial markets," said a government statement jointly issued by chiefs of the
three government bodies.
"The government will pursue market stabilization policies in a preemptive,
decisive and sufficient manner to minimize the total cost of implementing the
proposed measures," the statement noted.
The state guarantees will be applied immediately from Monday for three years on
foreign debts to be raised until June 30, 2009, the government said. Until it
obtains parliamentary approval, the guarantees will be provided by the state-run
Korea Development Bank and the Export-Import Bank of Korea.
In a related move, the government said that it will offer tax incentives for
long-term holdings of funds, a move that it expects will help strengthen
stability of the stock markets, which are undergoing a roller-coaster session,
sparking fears over capital outflow.
The government plans to inject 1 trillion won into the Industrial Bank of Korea,
a capital injection that is expected to increase its lending capacity by 12
trillion won for cash-strapped small- and medium-sized enterprises.
However, it excluded the much-sought demand to extend deposit insurance benefits,
as current market conditions are not serious enough to require such an action.
"We will take sufficient action at the right time if need arises." the statement
said.
Those measures are the latest government-led drive to stabilize the financial
markets as things are going from bad to worse after the collapse of global
investment banks last month. It is also in line with joint efforts taken by
advanced nations including capital injection, rate cuts and inter-bank loan
guarantees.
On the global front, the government said that it will step up international
cooperation, including with neighboring Asian countries, to tackle the evolving
U.S.-originated financial turmoil.
"The government will not only promote multinational collaboration among group of
20 industrialized countries, but also reinforce the regional ties centered on
Korea, China and Japan," said the government statement.
kokobj@yna.co.kr
(END)
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